Economy/Resources - 225. page

The Chongqing Evening Post recently reported that the Chinese Academy of Social Sciences (CASS) announced publication of the Blue Book of National Competitiveness. The Blue Book is based on research done on more than 100 countries. It concluded that China now holds the number 17 position among all countries and is number 9 among the G20. The Blue Book also set a goal for China to become number three in terms of national competitiveness (after the U.S. and the EU) by 2030 and number two (after the U.S.) by 2050. However, it is believed that China’s current growth model relies heavily on real estate investment and massive resource consumption. This is not a competitive model. The Blue Book also pointed out that China’s lack of the ability to innovate is a primary disadvantage. China is far behind Japan and South Korea in this area. 

Source: Chongqing Evening Post, October 26, 2010
http://www.cqwb.com.cn/NewsFiles/201010/26/20100026120000399042.shtml

According to a China Securities Journal article, the unreasonable allocation of revenue between the central and local governments has contributed to social instability. The central government takes the lion’s share of revenue, while smaller shares are allocated to local governments. However, local governments are responsible for expenditures on education, medical care, and retirement. When revenue falls short, two problems arise. One, local governments resort to auctioning land to augment their revenue. This has become the most popular source of income for local governments. Two, the severe lack of adequate funding for housing, education, medical care, and retirement, coupled with insufficient public facilities and services, has directly “impacted the stability and harmony of our society.” In contrast, the central government’s revenue is unusually high, “demonstrating the increase in national power.”

Source: China Securities Journal, October 28, 2010
http://cs.xinhuanet.com/xwzx/16/201010/t20101028_2644835.html

Zhu Hongren, Chief Engineer and spokesman for the Ministry of Industry and Information, recently stated that China is not using rare earth minerals as a bargaining tool. Instead, he said, China would like to achieve a win-win situation with other countries on the protection and utilization of these non-renewable natural resources. China holds 55.7% of the world’s reserve of rare earth minerals. China’s exports are the source of 90% of the international market. Zhu suggested that China did not do a good job of managing the production process in the past, especially in terms of environmental protection. Now China is controlling the mining, manufacturing, and trade areas to introduce order into the management process. He claimed that these steps do not violate WTO rules.

Source: Xinhua, October 28, 2010
http://news.xinhuanet.com/2010-10/28/c_12713000.htm 

The Economy and Information Committee of Guangdong Province published a news briefing on October 26. In it, the leaders of the Committee explained that the appreciation of the Chinese renminbi is already over the limit of affordability for most industrial enterprises in Guangdong Province. If the renminbi continues to strengthen in value this year, the majority of enterprises that export products and have a low profit margin will be unable to maintain normal operations and will therefore fold. The Deputy Director of the Guangdong Economy and Information Committee, Li Xiongming, said that the enterprises in Guangdong Province currently can only afford a two percent appreciation of the renminbi per year.

Source:
Yangcheng (Canton) Evening News, October 27, 2010
http://www.ycwb.com/epaper/ycwb/html/2010-10/27/content_955634.htm

 China’s central bank, The People’s Bank, issued its third quarter economic analysis on October 27, 2010. The analysis states that, compared to the second quarter, the market fears of an excessive downturn in the economy have receded; China’s economy is showing clear signs of stabilization, but pressure on prices cannot be ignored. The pressure comes from price hikes in food, the reform of income distribution and resource prices, as well as uncertainty about bulk commodity prices in the international market.

Source: Xinhua, October 27, 2010
http://news.xinhuanet.com/2010-10/27/c_13578505.htm

Huanqiu reprinted an article from China Business Times stating that U.S. Wall Street companies are responsible for the real estate bubble in China. China’s real estate bubble is being driven up by speculation on Wall Street. "They use all available tools, sometimes to sing the blues, and other times to flatter the Chinese real estate market. Their sole purpose is to make a profit.” Take MSREFIII International and MSREFIV International (both Morgan Stanley funds), for example. According to the article, 50% of their funds went to China where Morgan Stanley obtained Chinese government support and approval to jointly develop real estate with Chinese partners. They soon bought out their Chinese partners and took over control of the real estate. “They have now sold out their residential and office buildings. … Their profits on paper are at least 100%,” said the article. 

Source: Huanqiu, October 15, 2010
http://finance.huanqiu.com/roll/2010-10/1172836.html

On October 23, 2010, Chinese Business View (www.hsw.cn), one of China’s official websites, published an analytical article titled, “The Truth behind the United States’ Coercive Purchase of Chinese Rare Earth Minerals.” 

The article claims that the reason that US-led Western countries are pressuring China to rescind rare earth export restrictions is to store rare earth. Once China’s rare earth supply is depleted, they will have enough rare earth to confront China.

Source: Chinese Business View, October 23, 2010
http://hsb.hsw.cn/2010-10/23/content_7912280.htm

The China State Council issued a notice stating that, beginning December 1, 2010, China will collect a city maintenance and development tax and an education fee from enterprises in China that have foreign investors, and from foreign companies, as well as from foreign individuals. This is a major move to unify the tax policies for both domestic enterprises, and enterprises with foreign investors, after having unified the income taxes on them in 2008.

Source: Xinhua, October 21, 2010
http://news.xinhuanet.com/2010-10/21/c_13568892.htm